Gen X | Lending Curve

Contributing Author:
Brien Joyce
Vice President
EFG Companies

Millennials are in the market to buy cars. Are you in the market to lend to them?

According to Cox Automotive, Millennials are on pace to account for 40 percent of all vehicle sales by 2020. While it seemed like Millennials would never enter the market the way preceding generations had, this demographic is quickly making up for lost time.

Most of the Millennials with buying power today entered the job market around 2008 with record high student loan debt. Jobs were beyond scarce. High quality talent from Gen X and Boomers had flooded the market due to a markedly higher unemployment rate. It was virtually impossible for a recent college graduate to compete with a more experienced Boomer or Gen Xer for that entry-level job. Everyone was willing to work for less just to get by. These economic conditions made all those milestones of becoming an adult seem that much further away for Millennials. They deferred student loans, went back to school, moved in with their parents, and created innovative ways to save money.

A decade later, Millennials have a much greater ability to buy a vehicle, buy a house, get married and have children. However, their past experiences have greatly impacted their current buying habits. According to Cox Automotive:

83 percent say an affordable monthly payment is very important when selecting a lender.
39 percent financed their vehicle through a lender directly.
54 percent prefer to research financing options online.

Contributing Author: Steve Klees, Senior Vice President, Specialty Channels, EFG Companies

When you hear the term “Millennials” paired with the term “car,” what comes to mind? Do you automatically think, “Millennials aren’t interested in cars?” For the past few years, it seemed like a new article was published every month stating that the reason Millennials weren’t buying cars was due to personal preference.

Today, economics has proven that assertion false. According to J.D. Power & Associates, Millennials (those born between 1980 and 2004) accounted for 27 percent of new car sales in the U.S. last year. Millennials have already surpassed Generation X to become the second-largest group of new car buyers after Baby Boomers; and each year, the influence of the Baby Boomer generation recedes and Millennial buying power increases.

It turns out, personal preference had very little to do with Millennials approaching the auto industry. Rather, it had all to do with the economy, the job market, and wage growth. Most of the Millennials with buying power today entered the job market during the economic upheaval in the Great Recession. Because of the lack of prospects, some returned to school, while others moved in with parents or got roommates and stuck it out in low-paying or part-time jobs that did not utilize their post-high school training or education.